Recent rulings clear the way to court for suit claiming secret conspiracy
SEATTLE, April 2003 -- A U.S. District Court judge yesterday certified key portions of a class-action lawsuit against Burlington Northern Santa Fe Railway Company (NYSE:BNI) claiming the company conspired with Oregon attorneys representing thousands of railroad employees to fix settlement amounts for workers with hearing-loss claims. The action follows on the heels of the judge's nearly complete dismissal of Burlington Northern's motion to have the case dismissed, which was handed down Tuesday, April 15.
The suit, filed in U.S. District Court on March 26, 2001, claims Burlington Northern entered into a secret deal that facilitated easy settlements for awards drastically smaller than those of similar claims in actual court cases. In exchange, Burlington Northern received the lawyers' cooperation and an agreement not to take the claims of present and future clients to court.
The court has already ruled against a motion brought by the law firm alleged to have conspired with Burlington Northern. Oregon-based law firm Bricker Zakovics Querin Thompson & Ritchey PC (BZQ) asked the court for summary judgment and, on March 10, 2003, the court rejected nearly every aspect of their motion.
"We are encouraged by the court's rulings," said Steve Berman, the attorney from Seattle-based law firm Hagens Berman representing the workers. "We look forward to proving to the court that these two organizations conspired to defraud thousands of workers."
Judge Marsha Pechman's April 15, 2003 order dismissing Burlington Northern's arguments found sufficient evidence of the alleged conspiracy for the suit to move to trial. The class certification order, signed on April 16, removed the final obstacle for more than 2800 railway workers who used BZQ to handle hearing-loss claims to seek compensatory damages in court.
The judge certified a class action against BZQ for those who reside in Washington state, and also certified a broad class of BN employees from Washington, Oregon and Montana who entered into settlement agreements with BN to rescind those agreements. Plaintiffs in Montana and Oregon are still permitted to bring individual suits against BZQ.
The majority of class members -- approximately 2000 -- live in Washington state.
The suit, filed on behalf of workers by Steve Berman and attorney Sim Osborn, also of Seattle, claims Burlington Northern and BZQ conspired to decide hearing-loss settlement amounts by a secret, predetermined formula, saving Burlington Northern hundreds of millions of dollars in claims while illegally curbing employees' rights. BZQ failed to inform workers of the settlement formula and that the amounts offered by Burlington Northern were far below similar claims decided in court, and neglected to inform them that they had agreed never to prosecute their claims in court, according to the suit.
The suit seeks to release an estimated 2800 workers from settlement agreements reached with BN, giving the workers the opportunity to refile their cases. The court has already ruled that if the settlements are rescinded workers will not have to repay amounts already received in settlement. The suit also seeks to have BZQ forfeit the fees they earned in these allegedly fraudulent settlements, estimated to exceed $10 million.
According to the suit, the hearing-loss formula was based on a scale ranging from "profound hearing loss" to "minimal loss." This formula was used to determine the amount of money that an employee would receive. The suit states that these amounts were up to ten times less than awards given to similar hearing-loss claims that went to trial. All claims were capped at $65,000, and not a single claim of the 2800 cases settled for more than that amount.
The complaint alleges that when one employee could not get BZQ to commit to try his case, he hired a different lawyer and won $150,000 in a jury trial, an amount five times what he would have received under the formula. To conceal the conspiracy, BZQ and Burlington Northern refused to release clients' files, even when those clients were not bound by confidentiality agreements, the suit states.
BZQ specializes in representing injured railroad workers and is listed by several railroad workers' unions as "designated council," meaning that the union approves the firm as counsel for injured railroad workers who are union members.
According to the suit, Burlington Northern knew as early as 1966 that hearing loss from excessive noise was an occupational hazard for railway workers, but failed to acknowledge the issue. The suit charges that Burlington Northern did not address the hearing-loss issue for fear of prompting employee claims. Later, when Burlington Northern became concerned that it faced hundreds of millions of dollars in exposure because of hearing- loss claims, it coordinated the scheme as a way to reduce liability, the lawsuit claims.
In the claims against BZQ, the court certified the class action for those plaintiffs who live in Washington state. The court has not certified the case as a class action against BZQ in Oregon and Montana.
About Hagens Berman
Steve Berman is managing partner of Hagens Berman in Seattle. Recently cited as one of the nation's top 100 attorneys by The National Law Journal, Berman is a nationally recognized expert in class action litigation. Berman represented Washington State, 12 other states and Puerto Rico in lawsuits against the tobacco industry that resulted in the largest settlement in the history of litigation. Berman also served as counsel in several other high- profile cases including the Washington Public Power Supply litigation, which resulted in a settlement exceeding $850 million. Other cases include litigation involving the Exxon Valdez oil spill; Louisiana Pacific Siding; The Boeing Company; Morrison Knudsen; Piper Jaffray; Nordstrom; Boston Chicken; and Noah's Bagels. More information is available at www.hagens-berman.com.
Simeon Osborn is the managing partner in the law firm of Osborn & Smith which specializes in personal injury, aircraft litigation and civil litigation. Osborn has more than 17 years of experience in litigation and has developed a reputation for success. Osborn successfully represented several clients in a recent Longview, Washington railway accident as well as actions against the Port of Seattle in a recent shooting in the SeaTac Airport parking garage. Osborn was selected for inclusion in the biannual Best Lawyers in America list, given the highest rating by his peers in the Martindale-Hubbell survey, included in the Washington Law & Politics' Super Lawyers list and listed in the Bar Registry of Preeminent Lawyers. Osborn has argued cases to the Washington State Supreme Court and the Washington State Court of Appeals and serves on the Western Trial Lawyers' Board of Governors. Osborn received his law degree from University of Puget Sound in 1984.
SOURCE Hagens Berman
